IMF Investigates Intern's Appointment

By

Bob Davis and

David Gauthier-Villars

Updated Oct. 21, 2008 12:01 a.m. ET

WASHINGTON -- The International Monetary Fund is looking at whether its chief, Dominique Strauss-Kahn, influenced the appointment of a 26-year-old political prot&eacute;g&eacute; to a sought-after internship in the IMF's research department.

The managing director's connection with Emilie Byhet was a focus of discussions this summer among a handful of IMF board members, who were fielding complaints from staffers about arbitrary personnel decisions. At the time, the staff was being reduced by about 500 slots. An IMF spokesman said that "there is no evidence of favoritism in this case," in which Mr. Strauss-Kahn's office recommended Ms. Byhet for the slot.

ENLARGE

International Monetary Fund Managing Director Dominique Strauss-Kahn, center, at IMF headquarters in Washington on Oct. 13. Prominent French politicians have lined up to support him amid an abuse-of-power probe.
Associated Press

The board members decided against bringing the issue before the whole board, or intervening more broadly, individuals familiar with the deliberations said. Instead, they referred the matter to the legal department, which didn't take further action.

Ms. Byhet's internship ended in August. A man who said his name was Mr. Byhet, in Ms. Byhet's hometown of Normandy, declined to take a message for Emilie. A spokesman for Mr. Strauss-Kahn said Ms. Byhet and her parents are friends of Mr. Strauss-Kahn and his wife.

The episode is being re-examined as part of a larger look at Mr. Strauss-Kahn's personal behavior at the IMF. The IMF has retained the firm of Morgan, Lewis & Bockius LLP to investigate whether Mr. Strauss-Kahn abused his position in connection with a sexual relationship he had with a subordinate, Piroska Nagy, at the time a senior official in the IMF's Africa department. To determine whether Mr. Strauss-Kahn abused his power, the probe is looking at a wide variety of topics.

On Monday, Mr. Strauss-Kahn sent an email to the staff apologizing "for my error in initiating this relationship." Though he didn't cite Ms. Nagy by name, he called her a "talented economist and consummate professional." He said he had apologized to his wife and family.

Over the weekend, Anne Sinclair, the wife of Mr. Strauss-Kahn, said on her blog that she and her husband were expecting the outcome of the IMF investigation "calmly and dispassionately." Ms. Sinclair, a prominent French TV journalist, said that the "one-night affair" was behind them and that "we love each other as much as on the day we met."

Mr. Strauss-Kahn said that the incident "constituted an error of judgment on my part, for which I take full responsibility." But he said, "I firmly believe that I have not abused my position."

Prominent French politicians have lined up behind Mr. Strauss-Kahn. Jean-Claude Trichet, the French president of the European Central Bank, said in a Sunday radio interview he was convinced that Mr. Strauss-Kahn would be cleared of allegations that he abused his position. Luc Chatel, a French government spokesman, also offered support in a radio interview.

The allegations against Mr. Strauss-Kahn are a major distraction for the IMF, which is trying to show that it can play a central role in restructuring financial institutions to avoid a replay of the current global financial crisis. The Byhet matter could complicate its efforts to maintain that focus.

ENLARGE

Piroska Nagy, the IMF staffer with whom the fund's chief, Dominique Strauss-Kahn, had an affair.
Times of London

In the summer of 2005, Ms. Byhet joined the campaign team of Mr. Strauss-Kahn, who was seeking the Socialist nomination for the 2007 presidential election. According to two people who worked on the team, Ms. Byhet was often seen at La Planche (The Plank), the nickname of Mr. Strauss-Kahn's campaign building.

"She attended all his political meetings," a former college mate of Ms. Byhet at the Institute for Political Studies said. "She admired Mr. Strauss-Kahn and seriously believed he had his chance."

But Mr. Strauss-Kahn, 59, wasn't nominated, and in September 2007 he became IMF chief. Ms. Byhet was awarded an internship in February 2008. According to three individuals familiar with the process, the IMF human resources department usually sends a list of around 10 candidates for departments to choose from.

In this instance, a human resources manager in mid-January sent over Ms. Byhet's name alone. "I would very much appreciate your assistance in assigning her" as an intern, the manager wrote to the research department. Two individuals say that an HR manager also called the research department to say that "management," which in IMF lingo usually means the IMF managing director, favored the appointment.

The IMF spokesman added that "there is no evidence of any direct involvement" in the process by Mr. Strauss-Kahn. However, he noted "that it is accurate to say her name was forwarded to our Human Resources department by the Managing Director's office." He called that "routine practice."

While research interns are usually Ph.D. candidates in economics, Ms. Byhet had a master's degree in public policy and communications. She listed her first "professional experience" as an "internship with the campaign team of Mr. Dominique Strauss-Kahn."

The research department decided to accept the candidacy, in part to accommodate what they saw as a request by Mr. Strauss-Kahn. Her internship was scheduled to last from Feb. 1 to April 30, but was extended through August after she got ill in the middle of her program.

An IMF spokesman said that "standard IMF procedures" were followed in the case. Winter internships often have fewer candidates, the spokesman said, adding that the minimum standard for the position is a master's degree. According to her resume, Ms. Byhet did her undergraduate work at the Sorbonne University, where she studied economic history, and got a master's in public policy at the Institute for Political Studies.

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